fools and their money: Trump leads Biden 50/44 in the betting markets

RCP has Trump over Biden 49.9 / 42.0. Even if you don’t wager, at present 538 thinks Trump remains dependent on an Electoral College win. It’s still about GOTV, despite all the impending constraints like vote-by-mail. Cautionary tails are being chased.

This data highlights a few things. First, at least at the moment, Florida, Michigan, Pennsylvania and Wisconsin are very close to the national tipping point — so they’re likely to be among the more determinative states this November. Second, the former vice president’s lead nationally is big enough to carry these states. This is important — if Biden wins all of the states Hillary Clinton won in 2016 plus any combination of three of these four, he would be elected president.

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But crucially, Biden’s margins in these states are slightly smaller than his advantage in national polls. It’s worth thinking about the race at the state level in these relative terms because there’s still so much time for things to shift. If Biden’s lead nationally narrowed to 2 to 3 percentage points, these states would likely be much closer, if not lean toward Trump. Also, as The New York Times’ Nate Cohn wrote recently, Trump is likely to look stronger when pollsters start limiting their results to “likely voters.” Most of the April surveys in these four states were conducted among registered voters or all adults, two groups that include some people who may not vote in November.tend to do better in surveys of adults and registered voters than among likely voters.

In other words, this data suggests Trump may have an Electoral College advantage again — he could lose the popular vote and win the election. Of course, this data also suggests that if Biden is winning overall by a margin similar to his advantage now, Trump’s potential Electoral College edge really won’t matter.

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It’s likely that Trump and Republicans will target Maine, Minnesota, Nevada and New Hampshire in particular — looking for an upset in states Democrats could overlook because they might assume Biden won’t lose where Clinton won four years ago. Trump narrowly lost in those four states in 2016.5 Maine, Minnesota and New Hampshire are states in which a disproportionately high percentage of the electorate is non-Hispanic white voters without college degrees, an electoral bloc in which the president was especially strong in 2016 and could make even more gains in 2020.6

But we just need more polling to get a sense for how these states are shaping up relative to the country overall. All we have is one recent poll from any of these four states — a survey showing the former vice president ahead by 8 points in New Hampshire. Biden’s prospects would be brighter if he ends up outperforming Clinton among non-college whites, making these states less Republican-leaning relative to the country than they were in 2016.

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With actual bettors Trump remains a favorite.

Prediction markets can be thought of as belonging to the more general concept of crowdsourcing which is specially designed to aggregate information on particular topics of interest. The main purposes of prediction markets are eliciting aggregating beliefs over an unknown future outcome. Traders with different beliefs trade on contracts whose payoffs are related to the unknown future outcome and the market prices of the contracts are considered as the aggregated belief.
Economic theory for the ideas behind prediction markets can be credited to Friedrich Hayek in his 1945 article “The Use of Knowledge in Society” and Ludwig von Mises in his “Economic Calculation in the Socialist Commonwealth“. Modern economists agree that Mises' argument combined with Hayek's elaboration of it, is correct.[5] Prediction markets are championed in James Surowiecki's 2004 book The Wisdom of CrowdsCass Sunstein's 2006 Infotopia, and Douglas Hubbard's How to Measure Anything: Finding the Value of Intangibles in Business.[6] The research literature is collected together in the peer-reviewed The Journal of Prediction Markets, edited by Leighton Vaughan Williams and published by the University of Buckingham Press.
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Across the pond, the forthcoming US Presidential election in November is likely to be the biggest political event of this year, and with Donald Trump’s approval rating on the slide, there is currently little to choose between him (10/11 with William Hill) and Democrat rival Joe Biden (11/10). Andrew Cuomo would surely have been much shorter than his current price of 33/1, had he not made it clear that he is not interested in compromising his responsibility as New York Governor with speculation of a presidential campaign.

Of course,  Mr Trump has never been one to shy away from the limelight, so he’d probably bask in the fact that Paddy Power have given him a betting market all to himself with a whole section dedicated to Trump Specials. So, you know where to go if you fancy a couple of quid on him having a US Navy ship named after him (7/1), winning the Nobel Peace Prize before the end of his first term (12/1), converting to Islam (150/1), or dying his hair red, white and blue (200/1). They might seem crazy fun bets, but arguably no stranger or funnier than Trump’s elevation to POTUS in the first place.

Clearly, there is a cautionary balance to be drawn when betting on politics, as the fluid nature of events over a period of time can have a profound effect on the market, just like ante-post horse race betting.

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